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Extending the Eclectic Paradigm in International Business

Essays in Honor of John Dunning

Edited by H. Peter Gray

John Dunning is undoubtedly the world’s leading scholar on the subject of multinational corporations and international business. This collection of original essays is designed to honor this work, particularly his achievements during his association with Rutgers University.
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Chapter 8: Financial versus Industrial Firms in Industrial and Regional Restructuring

Ann Markusen


8. Financial versus industrial firms in industrial and regional restructuring Ann Markusen A rich literature on industrial restructuring emerged in the last two decades of the 20th century. Work on particular industries – ensembles of firms which compete in distinctive product and service lines – helped us understand how auto, steel, machining, and various service industries locate, invest, expand, hire, fire, relocate, and close (e.g. Massey and Meegan, 1978; Bluestone and Harrison, 1982; Markusen, 1999a). A complementary literature explored the regional development implications of firm strategies within this process, and among regional scientists and economic geographers, studying firm behavior as key to regional development became widespread (Schoenberger, 1991; Healey and Rawlinson, 1993; Markusen, 1994). Yet by and large, these accounts were unable to investigate firms’ internal workings to explore internal hierarchies and struggles between and among managers with conflicting missions, some of which bear on spatial outcomes. An exception is Schoenberger’s (1997) intriguing study of Lockheed’s California operations in the early postwar period. Nor do these accounts pay much attention to the relationship between financial and industrial firms, with their quite different profit calculus. Furthermore, the interactions between these types of firms and the state remain seriously neglected, despite ample evidence in case studies of industries and individual firms that state regulation and subsidies are powerful shapers of firms’ locational calculus and that firms spend considerable resources attempting to influence them. The central argument of this chapter is that financial firms, seeking short-term returns, may induce economic and...

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